Exhibit 10 (a) (15)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of December 15, 1999 by and among Inter*Act Electronic Marketing, Inc.,
a North Carolina corporation (the "Company"), and each Holder (as hereinafter
defined).
This Agreement is made in connection with that certain exchange offer
pursuant to which, in exchange for the surrender of at least 80% aggregate
principal amount of the 14% Senior Discount Notes Due 2003 of the Company the
Company shall issue or cause to be issued, as the case may be, (x) up to
$70,000,000 aggregate principal amount of Senior Pay-in-Kind Notes Due 2003 of
Inter*Act Operating Co., Inc. (the "Subsidiary Notes"), (y) warrants
("Warrants") to purchase up to an aggregate of 2,506,812 shares of common stock,
no par value, of the Company (the "Common Stock") and (z) up to an aggregate of
140,000 shares of the 14% Series B Mandatorily Convertible Preferred Stock of
the Company (the "Preferred Stock").
In consideration of the foregoing, the parties hereby agree as follows:
SECTION 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
"Advice" has the meaning set forth in Section 5.
"Affiliate" means, with respect to any specified Person, any other
Person who, directly or indirectly, controls, is controlled by, or is under
common control with such specified Person.
"Agreement" has the meaning set forth in the preamble.
"Business Day" means any day other than a day on which banks are
authorized or required to be closed in the State of New York.
"Commission" means the Securities and Exchange Commission.
"Common Stock" has the meaning set forth in the preamble.
"Company" has the meaning set forth in the preamble and shall include
the Company's successors by merger, acquisition, reorganization or otherwise.
"Controlling Persons" has the meaning set forth in Section 7(a).
"Damages" has the meaning set forth in Section 5(a).
"Demand Registration Statement" has the meaning set forth in
Section 3(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute, and the rules and regulations of
the Commission promulgated thereunder.
"Holder" means each holder of Registrable Securities.
"Holders' Counsel" means Xxxxxxx, Procter & Xxxx LLP, special counsel
to the Holders, or any successor counsel selected by Holders of a majority in
interest of the Registrable Securities.
"Initial Public Offering" shall mean the first public offering of
shares of Common Stock registered on Form X-0, Xxxx X-0, or Form S-11 (or any
successor or equivalent forms) under the Securities Act.
"Inspectors" has the meaning set forth in Section 5(m).
"NASD" has the meaning set forth in Section 5(q).
"Nasdaq" has the meaning set forth in Section 5(o).
"Objection Notice" has the meaning set forth in Section 5(a).
"Objecting Party" has the meaning set forth in Section 5(a).
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, limited liability company,
unincorporated organization or government or other agency or political
subdivision thereof.
"Piggy-Back Registration" has the meaning set forth in Section 4(a).
"Preferred Stock" has the meaning set forth in the preamble.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
Registration Statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement,
including a prospectus supplement with respect to the terms of the offering of
any portion of the Registrable Securities covered by such Registration
Statement, and all other amendments and supplements to the prospectus, including
post-effective amendments, and in each case all material incorporated by
reference or deemed to be incorporated by reference in such prospectus.
"Public Offering" means a public offering of Securities registered on
Form S-11 or Form S-3 (or any successor or equivalent forms) under the
Securities Act for the Company's own or others' account.
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"Records" has the meaning set forth in Section 5(m).
"Registrable Securities" means the Securities; provided, however, that
any Securities shall cease to be Registrable Securities when (i) a Registration
Statement covering such Registrable Securities has been declared effective and
such Registrable Securities have been disposed of by the holder thereof pursuant
to such effective Registration Statement, (ii) such Registrable Securities are
transferred by the holder thereof to any Person other than a Holder pursuant to
Rule 144 (or any successor rule or similar provision then in effect, but not
Rule 144A) under the Securities Act, including a sale pursuant to the provisions
of Rule 144(k), or (iii) such Securities shall have ceased to be outstanding.
"Registration Expenses" has the meaning set forth in Section 6.
"Registration Statement" means any registration statement of the
Company that covers any of the Registrable Securities pursuant to the provisions
of this Agreement (including any Demand Registration Statement and any Shelf
Registration Statement), and all amendments and supplements to any such
registration statement, including post-effective amendments, in each case
including the Prospectus, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"Required Filing Date" has the meaning set forth in Section 2(a).
"Securities" means (i) all shares of Common Stock issued or issuable
upon the conversion of the Preferred Stock or the Warrants and (ii) all shares
of Common Stock directly or indirectly issued or issuable in respect of the
securities referred to in clause (i) above by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation, or other reorganization.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor statute, and the rules and regulations of the
Commission promulgated thereunder.
"Shelf Registration Statement" has the meaning set forth in
Section 2(a).
"Suspension Notice" has the meaning set forth in Section 5.
"Suspension Period" has the meaning set forth in Section 5.
"Target Effective Date" means the date 30 days after the earlier of (i)
the Required Filing Date or (ii) the date on which the Shelf Registration
Statement is actually filed with the Commission.
"Target Effective Period" means the period of time between the date on
which a Shelf Registration Statement is actually declared effective and the
later of (i) the date which is 24 months following the date hereof, and (ii) the
date which is three months after the date on which
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a Holder ceases to be an Affiliate of the Company, provided that the Company
first provides each Holder with an opinion of counsel to such effect.
"Target Filing Date" has the meaning set forth in Section 3(a).
SECTION 2. SHELF REGISTRATION.
(a) Filing; Effectiveness. As soon as practicable but not
later than the thirtieth (30th) day following the date of the Company's Initial
Public Offering (the "Required Filing Date"), the Company shall prepare and file
with the Commission a "shelf" registration statement (the "Shelf Registration
Statement") on the appropriate form for an offering to be made on a continuous
basis pursuant to Rule 415 under the Securities Act (or any successor rule or
similar provision then in effect) covering all of the Registrable Securities.
The Company shall use its best efforts to have the Shelf Registration Statement
declared effective on or before the Target Effective Date and to keep such Shelf
Registration Statement continuously effective for the Target Effective Period.
Any Holder of Registrable Securities shall be permitted to withdraw all or any
part of the Registrable Securities from a Shelf Registration Statement at any
time prior to the effective date of such Shelf Registration Statement.
(b) Supplements; Amendments. The Company agrees, if necessary,
to supplement or amend the Shelf Registration Statement, as required by the
rules, regulations or instructions applicable to the registration form used by
the Company for such Shelf Registration Statement or by the Securities Act or as
requested (which request shall result in the filing of a supplement or
amendment) by any Holder of Registrable Securities to which such Shelf
Registration Statement relates, and the Company agrees to furnish to the
Holders, Holders' Counsel and any managing underwriter copies of any such
supplement or amendment prior to its being used and/or filed with the
Commission.
(c) Liquidated Damages. If the Shelf Registration Statement is
not filed on or before the Required Filing Date, the Company shall pay
liquidated damages to each Holder in an amount equal to $.10 per 1,000 shares of
the Registrable Securities per week beginning on the Required Filing Date. If
the Shelf Registration Statement is filed, but has not become effective on or
before the Target Effective Date, the Company shall pay liquidated damages to
each Holder in an amount equal to $.10 per 1,000 shares of the Registrable
Securities per week beginning on the Target Effective Date. The weekly
liquidated damages payable by the Company to the Holders as a result of a late
filing or a late declaration of effectiveness shall increase by an amount equal
to $.10 per 1,000 shares of the Registrable Securities two weeks after the
Required Filing Date or the Target Effective Date, as the case may be, and shall
thereafter increase by an amount equal to $.10 per 1,000 shares of the
Registrable Securities at the end of each subsequent two week period for so long
as the Shelf Registration Statement is not filed or is not declared effective.
If a stop order is imposed or if for any other reason the effectiveness of the
Shelf Registration Statement is suspended during the Target Effective Period,
then the Company shall pay liquidated damages to each Holder of the Registrable
Securities in an amount equal to $.10 per 1,000 shares of Registrable Securities
per week beginning on the date of such stop order or other suspension of
effectiveness. The weekly liquidated damages
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payable by the Company to the Holders as a result of the imposition of a stop
order or such other suspension of the effectiveness of the Shelf Registration
Statement during the Target Effective Period shall increase by an amount equal
to $.10 per 1,000 shares of the Registrable Securities two weeks after the stop
order was imposed or the effectiveness of the Shelf Registration Statement was
otherwise suspended and shall thereafter increase by an amount equal to $.10 per
1,000 shares of the Registrable Securities at the end of each subsequent two
week period for so long as such stop order remains in effect or the
effectiveness of the Shelf Registration Statement continues to be suspended. For
purposes of the two preceding sentences, the Holders will not be entitled to
receive liquidated damages under this Agreement during a Suspension Period (as
hereinafter defined) except to the extent permitted by Section 5 of this
Agreement. The Registrable Securities with respect to which liquidated damages
shall accrue and be payable in accordance with this Section 2(c) shall be those
Registrable Securities held by the Holders which are included or proposed to be
included in the Shelf Registration Statement.
The liquidated damages payable by the Company to the Holders pursuant
to this Section 2(c) shall be deemed to commence accruing on the day on which
the event triggering such liquidated damages occurs. Such liquidated damages
shall cease to accrue (i) with respect to the liquidated damages payable as a
result of the Company's failure to file the Shelf Registration Statement on or
prior to the Required Filing Date, on the day after the Shelf Registration
Statement is filed, (ii) with respect to the liquidated damages payable as a
result of the Company's failure to have the Shelf Registration Statement
declared effective on or prior to the Target Effective Date, on the day after
the Shelf Registration Statement is declared effective, or (iii) with respect to
the liquidated damages payable as a result of the imposition of a stop order or
the suspension for any other reason of the effectiveness of the Shelf
Registration Statement, on the day after the stop order is withdrawn or the
effectiveness of the Shelf Registration Statement is otherwise reinstated.
Notwithstanding the foregoing, if the sole reason why (i) the Company
has not filed the Shelf Registration Statement on or before the Required Filing
Date and/or (ii) the Shelf Registration Statement has not become effective on or
before the Target Effective Date, is that the Holders did not provide the
Company with information which is required to be disclosed in the Shelf
Registration Statement and which the Company requested the Holders to so provide
in writing at least 15 days prior to the Required Filing Date and/or the Target
Effective Date, as the case may be, the Company's obligation to pay liquidated
damages with respect to such late filing or such late declaration of
effectiveness will not begin to accrue until five days after the Holders have
provided such information to the Company.
The Company shall pay the liquidated damages due with respect to any
Registrable Securities at the end of each week during which such liquidated
damages accrue and, to the extent such liquidated damages are not paid when due,
shall thereafter accrue dividends at a rate equal to the U.S. prime rate plus 5%
per annum. Liquidated damages shall be paid to the Holders of Registrable
Securities entitled to receive such liquidated damages by wire transfer in
immediately available funds to the accounts designated by such Holders.
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The parties hereto agree that the liquidated damages provided for in
this Section 2 constitute a reasonable estimate as of the date hereof of the
damages that will be suffered by Holders of Registrable Securities by reason of
the failure of the Shelf Registration Statement to be filed, to be declared
effective and/or to remain effective, as the case may be, in accordance with
this Agreement. However, the right of the Holders to be paid the liquidated
damages provided for in this Section 2(c) is not intended to be and shall not be
construed or deemed to be an exclusive remedy, it being understood that the
Holders shall have the full right to pursue all available remedies at law or in
equity for any breach by the Company of any of its obligations under this
Agreement.
(d) Effective Registration. A registration will not be deemed
to have been effected as a Shelf Registration Statement unless the Shelf
Registration Statement with respect thereto has been declared effective by the
Commission and the Company has complied in all material respects with its
obligations under this Agreement with respect thereto; provided, however, that
if after the Shelf Registration Statement has been declared effective, the
offering of Registrable Securities pursuant to such Shelf Registration Statement
is interfered with by any stop order, injunction or other order or requirement
of the Commission or any other governmental agency or court, such Shelf
Registration Statement will be deemed not to have become effective during the
period of such interference (and liquidated damages shall accrue and be payable
under Section 2(c)) until the offering of Registrable Securities pursuant to
such Shelf Registration Statement may legally resume. If a registration
requested pursuant to this Section 2 is deemed not to have been effected, then
the Company shall continue to be obligated to effect a registration pursuant to
this Section 2.
(e) Selection of Underwriter. If the Holders so elect, the
offering of Registrable Securities pursuant to a Shelf Registration Statement
shall be in the form of an underwritten offering. If they so elect, the Holders
participating in such Shelf Registration Statement shall select one or more
nationally recognized firms of investment bankers to act as the book-running
managing underwriter or underwriters in connection with such offering and shall
select any additional investment bankers and managers to be used in connection
with the offering; provided, however, that such selection shall be subject to
the consent of the Company, which consent shall not be unreasonably withheld.
(f) "Lock-Up" Period. Notwithstanding anything to the contrary
in this Section 2 the Holders hereby acknowledge and agree that upon the request
of the managing underwriters of the Company's Initial Public Offering, the
Holders will agree to a standard "lock-up" with respect to the Registrable
Securities for a time period of no longer than 180 days, on the same terms and
conditions as the other stockholders of the Company (it being understood that
any such lock-up agreement shall not affect the rights of the holders of
Registrable Securities to have the Company file a Shelf Registration Statement
pursuant to Section 2(a)).
SECTION 3. DEMAND REGISTRATION.
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(a) Request for Registration. At any time when a Shelf
Registration Statement is not effective pursuant to Section 2 hereof, the
Holders of Registrable Securities constituting at least 25% of all Registrable
Securities at the time may request, in writing (a "Demand Request"), that the
Company prepare and file with the Commission a "shelf" registration statement
(the "Demand Registration Statement") on the appropriate form for an offering to
be made on a continuous basis pursuant to Rule 415 under the Securities Act (or
any successor rule or similar provision then in effect); provided, however, that
the Company shall not be required to file such Demand Registration Statement
unless, in the reasonable opinion of legal counsel to the Holders so requesting,
such registration is required in order for such Holders to transfer their
Registrable Securities and deliver unlegended certificates to the purchaser(s)
thereof; provided, further, that, subject to Section 5(e), the Company shall not
be required to effect more than one (1) Demand Registration Statement. Each
Demand Request so made by a Holder shall specify the number of Registrable
Securities proposed to be sold. Subject to Section 3(g), the Company shall file
the Demand Registration Statement within 30 days after receiving a Demand
Request (the "Target Filing Date") and shall use best efforts to cause the same
to be declared effective by the Commission as promptly as practicable after such
filing and to keep such Demand Registration Statement continuously effective for
a period beginning on the date such Demand Registration Statement is declared
effective and ending on the earlier of (i) the date which is twelve months
following such date, or (ii) the date on which all Registrable Securities
covered by such Demand Registration Statement have been disposed of pursuant
thereto.
(b) Supplements; Amendments. The Company agrees, if necessary,
to supplement or amend the Demand Registration Statement, as required by the
rules, regulations or instructions applicable to the registration form used by
the Company for such Demand Registration Statement or by the Securities Act or
as requested (which request shall result in the filing of a supplement or
amendment) by any Holder of Registrable Securities to which such Demand
Registration Statement relates, and the Company agrees to furnish to the
Holders, Holders' Counsel and any managing underwriter copies of any such
supplement or amendment prior to its being used and/or filed with the
Commission.
(c) Rights of Nonrequesting Holders. Upon receipt of any
Demand Request, the Company shall promptly (but in any event within 10 days
following the receipt thereof) give written notice of such proposed Demand
Registration Statement to all other Holders of Registrable Securities. Each of
such Holders shall have the right, exercisable by written notice to the Company
within 15 days of their receipt of the Company's notice, to elect to include in
such Demand Registration Statement such portion of each such Holder's
Registrable Securities as each such Holder may request. All Holders requesting
to have their Registrable Securities included in a Demand Registration Statement
in accordance with the preceding sentence (including the Holder or Holders
giving the Demand Request) shall be deemed "Requesting Holders" for purposes of
this Section 3.
(d) Priority with Respect to Demand Registration Statement. No
Securities to be sold for the account of any Person (including the Company)
other than a Requesting Holder shall be included in a Demand Registration
Statement unless the managing underwriter or underwriters, if any, shall advise
the Company or the Requesting Holders in writing that the
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inclusion of such Securities will not materially and adversely affect the price
at which the Securities included in such Demand Registration Statement may be
sold or the success of the offering (a "Material Adverse Effect"). Furthermore,
in the event the managing underwriter or underwriters, if any, shall advise the
Company or the Requesting Holders that even after exclusion of all Securities of
other Persons pursuant to the immediately preceding sentence, the amount of
Registrable Securities proposed to be included in such Demand Registration
Statement by Requesting Holders is sufficiently large to cause a Material
Adverse Effect, the number of Registrable Securities of the Requesting Holders
to be included in such Demand Registration Statement shall equal the number of
shares which the Company is so advised can be sold in such offering without a
Material Adverse Effect and the number of shares to be excluded from such Demand
Registration Statement such shares shall be allocated first to any Requesting
Holders who requested inclusion of their Registrable Securities pursuant to
Section 3(c) hereof and then, if an additional reduction is required, to all
other requesting Holders, in each case pro rata among such Requesting Holders on
the basis of the number of shares of Registrable Securities requested to be
included in such registration by each such Requesting Holder.
(e) Effective Registration. A registration statement will not
be deemed to have been effected as a Demand Registration Statement unless such
Demand Registration Statement has been declared effective by the Commission and
the Company has complied in all material respects with its obligations under
this Agreement with respect thereto; provided, however, that if, after a Demand
Registration Statement has been declared effective, the offering of Registrable
Securities pursuant to such Demand Registration Statement is interfered with by
any stop order, injunction or other order or requirement of the Commission or
any other governmental agency or court, such Demand Registration Statement will
be deemed not to have become effective during the period of such interference
until the offering of Registrable Securities pursuant to such Demand
Registration Statement may legally resume. If a Demand Registration Statement is
deemed not to have been effected, then the Company shall continue to be
obligated to effect such Demand Registration Statement pursuant to this
Section 3.
(f) Selection of Underwriter. If the Holders of a majority of
the Registrable Securities requested to be included in such Demand Registration
Statement so elect, the offering of Registrable Securities pursuant to such
Demand Registration Statement shall be in the form of an underwritten offering.
If they so elect, the Holders of a majority of the Registrable Securities
requested to be included in such Demand Registration Statement shall select one
or more nationally recognized firms of investment bankers to act as the
book-running managing underwriter or underwriters in connection with such
offering and shall select any additional investment bankers and managers to be
used in connection with the offering; provided, however, that such selection
shall be subject to the consent of the Company, which consent shall not be
unreasonably withheld.
(g) Deferral of Filing. The Company may defer the filing (but
not the preparation) of a Demand Registration Statement required by Section 3(a)
until a date not later than 30 days after the Target Filing Date (or, if longer,
30 days after the effective date of the registration statement contemplated by
clause (ii) below) if (i) at the time the Company receives the Demand Request,
the Company or any of its Subsidiaries is engaged in confidential
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negotiations or other confidential business activities, disclosure of which
would be required in such Demand Registration Statement (but would not be
required if such Demand Registration Statement were not filed), and the Board of
Directors of the Company determines in good faith that such disclosure would be
materially detrimental to the Company and its stockholders or would have a
material adverse effect on any such confidential negotiations or other
confidential business activities, or (ii) prior to receiving the Demand Request,
the Board of Directors had determined to effect a registered underwritten public
offering of the Company's equity securities for the Company's account and the
Company had taken substantial steps (including, but not limited to, selecting a
managing underwriter for such offering) and is proceeding with reasonable
diligence to effect such offering. A deferral of the filing of a Demand
Registration Statement pursuant to this Section 3(g) shall be lifted, and the
requested Demand Registration Statement shall be filed forthwith, if, in the
case of a deferral pursuant to clause (i) of the preceding sentence, the
negotiations or other activities are disclosed or terminated, or, in the case of
a deferral pursuant to clause (ii) of the preceding sentence, the proposed
registration for the Company's account is abandoned. In order to defer the
filing of a Demand Registration Statement pursuant to this Section 3(g), the
Company shall promptly (but in any event within 10 days), upon determining to
seek such deferral, deliver to each Holder a certificate signed by an executive
officer of the Company stating that the Company is deferring such filing
pursuant to this Section 3(g) and an approximation of the anticipated delay. The
Company may defer the filing of a particular Demand Registration Statement
pursuant to this Section 3(g) only once.
SECTION 4. PIGGY-BACK REGISTRATION.
(a) Request for Registration. Each time the Company proposes
to file a registration statement under the Securities Act with respect to an
offering by the Company for its own account or for the account of any of its
securityholders of any class of equity security (other than (i) a registration
statement on Form S-4 or S-8 (or any substitute form that is adopted by the
Commission) or (ii) a registration statement filed in connection with an
exchange offer or the offering of securities solely to the Company's existing
securityholders), then the Company shall give written notice of such proposed
filing to each Holder of Registrable Securities as soon as practicable (but in
no event less than 30 days before the anticipated filing date), and such notice
shall offer such Holder the opportunity to register such number of shares of
Registrable Securities as each such Holder may request (which request must be
made in writing, no later than 20 days after receipt of such notice, and shall
specify the Registrable Securities intended to be disposed of by such Holder and
the intended method of distribution thereof) (a "Piggy-Back Registration"). The
Company shall permit, or, if the offering relating to a PiggyBack Registration
is an underwritten offering, shall use its best efforts to cause the managing
underwriter or underwriters of such proposed underwritten offering to permit,
the Registrable Securities requested to be included in such Piggy-Back
Registration to be included on the same terms and conditions as any similar
securities of the Company or any other securityholder included therein and shall
permit, or use its best efforts to cause such managing underwriter or
underwriters to permit, the sale or other disposition of such Registrable
Securities in accordance with such Holder's intended method of distribution
thereof. Any Holder shall have the right to withdraw its request for inclusion
of its Registrable Securities in any registration statement pursuant to this
Section 4 by giving written notice to the Company of such withdrawal. The
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Company may withdraw a Piggy-Back Registration at any time prior to the time it
becomes effective, provided that the Company shall give immediate notice of such
withdrawal to the Holders who requested Registrable Securities to be included in
such Piggy-Back Registration and shall reimburse such Holders for all reasonable
out-of-pocket expenses (including counsel fees and expenses) incurred prior to
such withdrawal.
(b) Reduction of Offering. In connection with an underwritten
offering where Holders have requested a Piggy-Back Registration pursuant to
Section 3(a), the Company shall use its best efforts to cause all Registrable
Securities requested to be included in such Piggy-Back Registration to be
included as provided in Section 4(a). If the managing underwriter or
underwriters of any such Piggy-Back Registration which is an underwritten
offering have informed, in writing, the Holders requesting inclusion of
Registrable Securities in such offering that it is their opinion that the total
number of shares which the Company, Holders of Registrable Securities and any
other Persons participating in such registration intend to include in such
offering is such as to materially and adversely affect the success of such
offering, then the shares to be offered for the account of all Persons
participating in such Piggy-Back Registration shall be reduced or limited (to
zero if necessary) and the Company shall include in the registration the maximum
number of securities which it is so advised can be sold without the adverse
effect, allocated as follows:
(i) First, the securities proposed to be registered
by the Company for its own account;
(ii) Second, the securities proposed to be registered
by the Company, other than for its own account, including, without
limitation, the Registrable Securities duly requested to be included in
the registration by the Holders and the Shares required to be
registered by the Company pursuant to the exercise by any Person other
than a Holder of Registrable Securities, of its piggy-back rights.
All reductions in shares included in a Registration Statement shall be
allocated pro rata in proportion to the respective number of shares requested to
be included in such offering by such Persons to the extent necessary to reduce
the total number of shares requested to be included in such offering to the
number of shares, if any, recommended by such managing underwriter or
underwriters.
Although the specific shares of Common Stock disposed of pursuant to a
Piggy-Back Registration will cease to be Registrable Securities, the mere
registration of Registrable Securities under this Section 4 shall not relieve
the Company of its obligation to effect or maintain a Shelf Registration
Statement pursuant to Section 2 or a Demand Registration Statement pursuant to
Section 3. No failure by the Holders to elect a Piggy-Back Registration under
this Section 4 or to complete the sale of Registrable Securities pursuant to the
registration statement effected in connection therewith, and no withdrawal of
Registrable Securities from a Piggy-Back Registration, shall relieve the Company
of any other obligation under this Agreement, including without limitation, the
Company's obligations under Sections 6 and 7.
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SECTION 5. REGISTRATION PROCEDURES.
In connection with the obligations of the Company to effect or cause
the registration of any Registrable Securities pursuant to the terms and
conditions of this Agreement, the Company shall use its best efforts to effect
the registration and sale of such Registrable Securities in accordance with the
intended method of distribution thereof as quickly as practicable, and in
connection therewith:
(a) The Company shall prepare and file with the Commission a
Registration Statement on the appropriate form under the Securities
Act, which Registration Statement shall comply as to form in all
material respects with the requirements of the applicable form and
include all financial statements required by the Commission to be filed
therewith, and use its best efforts to cause such Registration
Statement to become effective and remain effective in accordance with
the provisions of this Agreement; provided, however, that at least ten
Business Days prior to filing a Registration Statement or Prospectus or
any amendments or supplements thereto, including documents incorporated
by reference after the initial filing of the Registration Statement,
the Company shall furnish to the Holders of the Registrable Securities
covered by such Registration Statement, Holders' Counsel and the
underwriters, if any, draft copies of all such documents proposed to be
filed, which documents will be subject to the review of Holders'
Counsel and the underwriters, if any, and the Company will not, unless
required by law or this Agreement, file any Registration Statement or
amendment thereto or any Prospectus or any supplement thereto to which
Holders holding a majority in interest of the Registrable Securities
covered by such Registration Statement or the underwriters with respect
to such Securities, if any, shall object; provided, however, that any
such objection to the filing of any Registration Statement or amendment
thereto or any Prospectus or supplement thereto shall be made by
written notice (the "Objection Notice") delivered to the Company no
later than ten Business Days after the party or parties asserting such
objection (the "Objecting Party") receives draft copies of the
documents that the Company proposes to file. The Objection Notice shall
set forth the objections and the specific areas in the draft documents
where such objections arise. The Company shall have five Business Days
after receipt of the Objection Notice to correct such deficiencies to
the satisfaction of the Objecting Party, and will notify each Holder of
any stop order issued or threatened by the Commission in connection
therewith and shall use its best efforts to prevent the entry of such
stop order or, if entered, to have such stop order withdrawn at the
earliest possible moment.
(b) The Company shall promptly prepare and file with the
Commission such amendments and post-effective amendments to each
Registration Statement as may be necessary to keep such Registration
Statement effective for as long as the Company is required to keep such
Registration Statement effective pursuant to the terms hereof; shall
cause the Prospectus to be supplemented by any required Prospectus
supplement, and, as so supplemented, to be filed pursuant to Rule 424
under the Securities Act; and shall comply with the provisions of the
Securities Act applicable to it with respect to the disposition of all
Registrable Securities covered by such Registration Statement during
11
the applicable period in accordance with the intended methods of
disposition by the Holders set forth in such Registration Statement or
amendment thereto or such Prospectus or supplement thereto;
(c) The Company shall promptly furnish to any Holder and the
underwriters, if any, without charge, such number of conformed copies
of each Registration Statement and any post-effective amendment thereto
and such number of copies of the Prospectus (including each preliminary
Prospectus) and any amendments or supplements thereto, any documents
incorporated by reference therein and such other documents as any such
Holder or underwriter may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities being
sold by such Holder.
(d) The Company shall, on or prior to the date on which a
Registration Statement is declared effective, (i) use its best efforts
to register or qualify the Registrable Securities covered by such
Registration Statement under the securities or "blue sky" laws of each
of the 50 states of the United States (or such jurisdictions as any
Holder, Holders' counsel or underwriter may request) or obtain
appropriate exemptions therefrom; (ii) do any and all other acts and
things which may be necessary or advisable to enable the Holders of
Registrable Securities included in such Registration Statement to
consummate the disposition of such Registrable Securities in accordance
with their intended method of distribution thereof; (iii) use its best
efforts to keep each such state securities or "blue sky" registration
or qualification (or exemption therefrom) effective during the period
in which the Company is required to keep the Registration Statement
effective; and (iv) do any and all other acts or things which may be
necessary or advisable to enable the Holders of Registrable Securities
included in such Registration Statement to complete the disposition in
such jurisdictions of such Registrable Securities in accordance with
their intended method of distribution thereof; provided, however, that
the Company shall not be required (A) to qualify to do business in any
jurisdiction where it would not otherwise be required to so qualify but
for this Section 5(d) or (B) to file any general consent to service of
process.
(e) The Company shall use its best efforts to cause the
Registrable Securities covered by a Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and
operations of the Company to enable the Holders to consummate the
disposition of such Registrable Securities in accordance with their
intended method of distribution thereof.
(f) The Company shall promptly notify each Holder, Holders'
Counsel and any underwriter and (if requested by any such Person)
confirm such notice in writing, (i) when a Registration Statement or a
Prospectus or any post-effective amendment or any Prospectus supplement
has been filed and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of
any request by the Commission or any state securities authority for
amendments and supplements to a Registration Statement and Prospectus
or for additional information after the Registration Statement has
become effective, (iii) of the issuance by the Commission of any stop
order
12
suspending the effectiveness of a Registration Statement or the
initiation or threatening of any proceedings for that purpose, (iv) of
the issuance by any state securities commission or other regulatory
authority of any order suspending the registration or qualification or
exemption from registration or qualification of any of the Registrable
Securities under state securities or "blue sky" laws or the initiation
of any proceedings for that purpose, (v) if, between the effective date
of a Registration Statement and the closing of any sale of Registrable
Securities covered thereby, the representations and warranties of the
Company contained in any underwriting agreement, securities sales
agreement or other similar agreement, if any, relating to the offering
of such Registrable Securities cease to be true and correct in all
material respects, and (vi) of the happening of any event which makes
any statement of a material fact made in a Registration Statement or
related Prospectus untrue or which requires the making of any changes
in such Registration Statement or Prospectus so that such Registration
Statement or Prospectus will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and, as
promptly as practicable thereafter, prepare and file an amendment to
such Registration Statement with the Commission and furnish to the
Holders and any underwriter a supplement or amendment to such
Prospectus so that, as thereafter deliverable to the purchasers of such
Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(g) The Company shall make generally available to the Holders
an earnings statement satisfying the provisions of Section 11(a) of the
Securities Act no later than 30 days after the end of the 12-month
period beginning with the first day of the Company's first fiscal
quarter commencing after the effective date of a Registration
Statement, which earnings statement shall cover said 12-month period,
and which requirement will be deemed to be satisfied if the Company
timely files complete and accurate information on Forms 10-Q, 10-K and
8-K under the Exchange Act and otherwise complies with Rule 158 under
the Securities Act.
(h) The Company shall promptly use its best efforts to prevent
the issuance of any order suspending the effectiveness of a
Registration Statement, and, if any such order suspending the
effectiveness of a Registration Statement is issued, shall promptly use
its best efforts to obtain the withdrawal of such order at the earliest
possible moment.
(i) The Company shall, if requested by the managing
underwriter or underwriters, if any, Holders' Counsel, or any Holder
promptly incorporate in a Prospectus supplement or post-effective
amendment such information as such managing underwriter or underwriters
or Holder or Holders' Counsel requests to be included therein,
including, without limitation, with respect to the Registrable
Securities being sold by such Holder to such underwriter or
underwriters, the purchase price being paid therefor by such
underwriter or underwriters and any other terms of an underwritten
13
offering of the Registrable Securities to be sold in such offering, and
the Company shall promptly make all required filings of such Prospectus
supplement or post-effective amendment.
(j) The Company shall, as promptly as practicable after the
filing with the Commission of any document which is incorporated by
reference into a Registration Statement (in the form in which it was
incorporated), deliver a copy of each such document to each of the
Holders and to Holders' Counsel.
(k) The Company shall cooperate with the Holders and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (which shall not bear any
restrictive legends unless required under applicable law) representing
Registrable Securities sold under a Registration Statement to the
purchasers thereof, and enable such Registrable Securities to be in
such denominations and registered in such names as the managing
underwriter or underwriters, if any, or such Holders may request and
keep available and make available to the Company's transfer agent prior
to the effectiveness of such Registration Statement a supply of such
certificates.
(l) The Company shall enter into such customary agreements
(including, if applicable, an underwriting agreement in customary form)
and take such other actions as the Holders or the underwriters retained
by the Holders participating in an underwritten public offering, if
any, may request in order to expedite or facilitate the disposition of
Registrable Securities (the Holders may, at their option, require that
any or all of the representations, warranties and covenants of the
Company to or for the benefit of any underwriters also be made to and
for the benefit of the Holders).
(m) The Company shall promptly make available to each Holder,
any underwriter participating in any disposition of Registrable
Securities pursuant to a Registration Statement, and any attorney,
accountant or other agent or representative retained by any such Holder
or underwriter (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably necessary
to enable them to exercise their due diligence responsibility, and
cause the Company's officers, directors and employees to supply all
information requested by any such Inspector in connection with such
Registration Statement.
(n) The Company shall furnish to each Holder of Registrable
Securities included in such offering and to each underwriter, if any, a
signed counterpart, addressed to such Holder or underwriter, of (i) an
opinion or opinions of counsel to the Company, and (ii) a comfort
letter or comfort letters from the Company's independent public
accountants, each in customary form and covering matters of the type
customarily covered by opinions or comfort letters, as the case may be.
14
(o) The Company shall use its best efforts to cause the
Registrable Securities included in a Registration Statement (if the
Company and the Registrable Securities so qualify) (i) to be listed on
each national securities exchange, if any, on which similar securities
issued by the Company are then listed, or (ii) if similar securities of
the Company are not then listed, to be authorized for quotation or
listing, as applicable, on the New York Stock Exchange or The Nasdaq
Stock Market, Inc.'s ("Nasdaq") National Market or Small-Cap Market.
(p) The Company shall provide a CUSIP number for all
Registrable Securities covered by a Registration Statement not later
than the effective date of such Registration Statement.
(q) The Company shall cooperate with each Holder and each
underwriter participating in the disposition of Registrable Securities
and their respective counsel in connection with any filings required to
be made with the National Association of Securities Dealers, Inc.
("NASD").
(r) The Company shall, during the period when the Prospectus
is required to be delivered under the Securities Act, promptly file all
documents required to be filed with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act.
(s) The Company shall appoint or maintain a transfer agent and
registrar for all Registrable Securities covered by a Registration
Statement not later than the effective date of such Registration
Statement.
(t) In connection with an underwritten offering, the Company
shall participate, to the extent reasonably requested by the managing
underwriter for the offering or the Holders, in customary efforts to
sell the securities being offered, including without limitation,
participating in "road shows."
(u) If a Holder proposes to sell a block of Registrable
Securities with a value in excess of $1 million, the Company shall make
members of the management of the Company available for reasonable
selling efforts, including senior management attendance at road shows,
provided, however, that the selling Holder or Holders shall reimburse
the Company for its reasonable out-of-pocket expenses actually incurred
at the request of such selling Holder or Holders in connection with
such selling efforts.
(v) If the Registrable Securities are of a class of securities
that is listed on a national securities exchange, the Company shall
file copies of any Prospectus with such exchange in compliance with
Rule 153 under the Securities Act so that the Holders shall benefit
from the prospectus delivery procedures described therein.
In the case of a Shelf Registration Statement, each Holder, upon
receipt of any notice (a "Suspension Notice") from the Company of the happening
of any event of the kind described in Section 5(f)(vi), shall forthwith
discontinue disposition of the Registrable Securities pursuant
15
to the Shelf Registration Statement covering such Registrable Securities until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(f) or until such Holder is advised in writing (the
"Advice") by the Company that the use of the Prospectus may be resumed, and such
Holder has received copies of any additional or supplemental filings which are
incorporated by reference in the Prospectus, and, if so directed by the Company,
such Holder will, or will request the managing underwriter or underwriters, if
any, to, deliver to the Company (at the Company's expense) all copies, other
than permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice; provided, however, that the Company shall not give a Suspension Notice
until after the Shelf Registration Statement has been declared effective and
shall not give more than one Suspension Notice during any period of 12
consecutive months and in no event shall the period from the date on which any
Holder receives a Suspension Notice to the date on which any Holder receives
either the Advice or copies of the supplemented or amended Prospectus
contemplated by Section 5(f) (the "Suspension Period") exceed 30 days. In the
event that the Company shall give any Suspension Notice, (i) the Company shall
use its best efforts and take such actions as are reasonably necessary to render
the Advice and end the Suspension Period as promptly as practicable and (ii) the
time periods for which a Shelf Registration Statement is required to be kept
effective pursuant to Section 2 hereof shall be extended by the number of days
during the Suspension Period. If any Suspension Period exceeds 30 days or more
than one Suspension Notice is given during any period of 12 consecutive months,
the Company shall pay liquidated damages to each Holder of Registrable
Securities in an amount equal to $.10 per 1,000 shares of the Registrable
Securities included in the Shelf Registration Statement per week beginning on
the 31st day of such Suspension Period or the date of such additional Suspension
Notice, as the case may be. The weekly liquidated damages payable by the Company
to the Holders as a result of the continuance of a Suspension Period beyond 30
days or as a result of the giving of more than one Suspension Notice during any
12 months period shall increase by an amount equal to $.10 per 1,000 shares of
the Registrable Securities two weeks after the event triggering such liquidated
damages and shall thereafter increase by an amount equal to $.10 per 1,000
shares of the Registrable Securities at the end of each subsequent two week
period for so long as the event triggering such liquidated damages has not been
eliminated. The Company shall pay the liquidated damages due with respect to any
Registrable Securities at the end of each week during which such damages accrue.
Liquidated damages shall be paid to the Holders of Registrable Securities
entitled to receive such liquidated damages by wire transfer in immediately
available funds to the accounts designated by such Holders.
If any Registration Statement refers to any Holder by name or otherwise
as the holder of any securities of the Company, then such Holder shall have the
right to require (i) the insertion therein of language, in form and substance
reasonably satisfactory to such Holder, to the effect that the holding by such
Holder of such securities is not to be construed as a recommendation by such
Holder of the investment quality of the Company's securities covered thereby and
that such holding does not imply that such Holder will assist in meeting any
future financial requirements of the Company, or (ii) in the event that such
reference to such Holder
16
by name or otherwise is not required by the Securities Act or any similar
Federal or state securities or "blue sky" statute and the rules and regulations
thereunder then in force, the deletion of the reference to such Holder.
SECTION 6. REGISTRATION EXPENSES. Any and all expenses incident to the
Company's performance of or compliance with this Agreement, including without
limitation, all Commission and securities exchange, Nasdaq or NASD registration,
listing and filing fees, all fees and expenses incurred in connection with
compliance with state securities or "blue sky" laws (including reasonable fees
and disbursements of counsel for any underwriters or Holder in connection with
the state securities or "blue sky" qualifications of the Registrable
Securities), printing expenses, messenger and delivery expenses, internal
expenses (including, without limitation, all salaries and expenses of the
Company's officers and employees performing legal or accounting duties), all
expenses for word processing, printing and distributing any Registration
Statement, any Prospectus, any amendments or supplements thereto, any
underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement, the fees and
expenses incurred in connection with the listing of the Registrable Securities,
the fees and disbursements of counsel for the Company and of the independent
certified public accountants of the Company (including the expenses of any
comfort letters or costs associated with the delivery by independent certified
public accountants of a comfort letter or comfort letter requested pursuant to
Section 5(n), Securities Act liability insurance (if the Company elects to
obtain such insurance), the reasonable fees and expenses of any special experts
or other Persons retained by the Company in connection with any registration,
the reasonable fees and disbursements of Holders' Counsel and any reasonable
out-of-pocket expenses of the Holders and their agents, including any reasonable
travel costs (but excluding underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of Registrable Securities)
(all such expenses being herein called "Registration Expenses"), will be borne
by the Company whether or not the Shelf Registration Statement, Demand
Registration Statement or Piggy-Back Registration to which such expenses relate
becomes effective.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless, to the full extent permitted by law, each Holder,
its partners, officers, directors, trustees, stockholders, employees, agents and
investment advisers, and each Person who controls such Holder within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act, or
is under common control with, or is controlled by, such Holder, together with
the partners, officers, directors, trustees, stockholders, employees, agents and
investment advisors of such controlling Person (collectively, the "Controlling
Persons"), from and against all losses, claims, damages, liabilities and
expenses (including, without limitation, any legal or other fees and expenses
incurred by any Holder or any such Controlling Person in connection with
defending or investigating any action or claim in respect thereof)
(collectively, the "Damages") to which such Holder, its partners, officers,
directors, trustees, stockholders, employees, agents and investment advisers,
and any such Controlling Person, may become subject under the Securities Act or
otherwise, insofar as such Damages (or proceedings in
17
respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of material fact contained in any Registration Statement (or any
amendment thereto) pursuant to which Registrable Securities were registered
under the Securities Act, including all documents incorporated therein by
reference, or are caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or are caused by any
omission or alleged omission to state therein a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the Company shall not be liable
for Damages to any Holder under this Section 6(a) to the extent that any such
Damages (i) arise out of or are based upon any such untrue statement or omission
which is based upon information relating to such Holder furnished in writing to
the Company by such Holder expressly for use in any such Registration Statement
(or any amendment thereto) or Prospectus (or amendment or supplement thereto);
or (ii) were caused by the fact that such Holder sold Securities to a Person as
to whom it shall be established that there was not sent or given, or deemed sent
or given pursuant to Rule 153 under the Securities Act, at the time of or prior
to the written confirmation of such sale, a copy of the Prospectus as then
amended or supplemented if, and only if, (a) the Company has previously
furnished copies of such amended or supplemented Prospectus to such Holder and
(b) such Damages were caused by any untrue statement or omission or alleged
untrue statement or omission contained in the Prospectus so delivered which was
corrected in such amended or supplemented Prospectus. In connection with an
underwritten offering, the Company will indemnify the underwriters thereof,
their officers and directors and each Person who controls such underwriters
(within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act) to the same extent as provided above with respect to the
indemnification of the Holders of Registrable Securities except with respect to
information provided by the underwriter specifically for inclusion therein.
(b) Indemnification by the Holders. Each Holder agrees,
severally and not jointly, to indemnify and hold harmless the Company, its
directors and officers and each Person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against all Damages to the same extent as the foregoing
indemnity from the Company to such Holder, but only to the extent such Damages
arise out of or are based upon any untrue statement of a material fact contained
in any Registration Statement (or any amendment thereto) or Prospectus (or any
amendment or supplement thereto) or are caused by any omission to state therein
a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, which untrue statement
or omission is based upon information relating to such Holder furnished in
writing to the Company by such Holder expressly for use in any such Registration
Statement (or any amendment thereto) or any such Prospectus (or any amendment or
supplement thereto); provided, however, that such Holder shall not be obligated
to provide such indemnity to the extent that such Damages result from the
failure of the Company to promptly amend or take action to correct or supplement
any such Registration Statement or Prospectus on the basis of corrected or
supplemental information furnished in writing to the
18
Company by such Holder expressly for such purpose. In no event shall the
liability of any Holder of Registrable Securities hereunder be greater in amount
than the amount of the proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) Indemnification Procedures. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to either paragraph
(a) or (b) above, such Person (the "indemnified party") shall promptly notify
the Person against whom such indemnity may be sought (the "indemnifying party")
in writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceedings and shall pay the fees and disbursements of such
counsel relating to such proceeding. The failure of an indemnified party to
notify the indemnifying party with respect to a particular proceeding shall not
relieve the indemnifying party from any obligation or liability (i) which it may
have pursuant to this Agreement if the indemnifying party is not materially
prejudiced by such failure to so notify it or (ii) which it may otherwise have
pursuant to this Agreement. The failure of an indemnified party to notify the
indemnifying party with respect to a particular proceeding shall not relieve the
indemnifying party from any obligation or liability (i) which it may have
pursuant to this Agreement if the indemnifying party is not substantially
prejudiced by such failure to so notify it or (ii) which it may have otherwise
than pursuant to this Agreement. In any such proceeding, any indemnified party
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel, or (ii) the indemnifying party fails promptly to
assume the defense of such proceeding or fails to employ counsel reasonably
satisfactory to such indemnified party, or (iii) (A) the named parties to any
such proceeding (including any impleaded parties) include both such indemnified
party or an Affiliate of such indemnified party and any indemnifying party or an
Affiliate of such indemnifying party, (B) there may be one or more defenses
available to such indemnified party or any Affiliate of such indemnified party
that are different from or additional to those available to any indemnifying
party or any Affiliate of any indemnifying party and (C) such indemnified party
shall have been advised by such counsel that there may exist a conflict of
interest between or among such indemnified party or any Affiliate of such
indemnified party and such indemnifying party or any Affiliate of such
indemnifying party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel of its
choice at the expense of the indemnifying party, the indemnifying party shall
not have the right to assume the defense thereof and such counsel shall be at
the expense of the indemnifying party, it being understood, however, that unless
there exists a conflict among indemnified parties, the indemnifying parties
shall not, in connection with any one such proceeding or separate but
substantially similar or related proceedings in the same jurisdiction, arising
out of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (together with appropriate
local counsel) at any time for such indemnified parties. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent but, if settled with such consent or if there be a final
judgment for the plaintiff,
19
the indemnifying party agrees to indemnify each indemnified party from and
against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of each indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which such indemnified party is a party, and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on all claims
that are the subject matter of such proceeding with no payment by such
indemnified party of consideration in connection with such settlement.
(d) Contribution. If the indemnification from the indemnifying
party provided for in this Section 7 is found, pursuant to a final judicial
determination not subject to appeal, to be unavailable to an indemnified party
hereunder or insufficient in respect of any Damages incurred by such indemnified
party, then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the Damages paid or payable by such indemnified party
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified parties in connection with the actions or
omissions that resulted in such Damages, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
parties shall be determined by reference to, among other things, whether any
action or omission in question, including any untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact,
has been made by, or relates to information supplied by, such indemnifying party
or indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the Damages referred to above shall be
deemed to include, subject to the limitations set forth in Section 7(c), any
legal or other expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 7(d), no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public (less any underwriting discounts or
commissions) exceeds the amount of any damages which such underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and no selling Holder shall be
required to contribute any amount in excess of the amount by which the total net
proceeds received by such selling Holder with respect to Registrable Securities
sold by such selling Holder exceeds the amount of any damages which such selling
Holder has otherwise been required to pay by reason of such untrue statement or
alleged untrue statement or omission or alleged omission. Each Holder's
obligation to contribute pursuant to this Section 7(d) is several and not joint
and shall be determined by reference to the proportion that the proceeds of the
offering received by such Holder bears to the total proceeds of the offering
received by all the Holders. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
20
misrepresentation. The remedies provided for in this Section 7 are not exclusive
and shall not limit any rights or remedies that may otherwise be available to
any indemnified party at law or in equity.
Notwithstanding the foregoing, if indemnification is available under
paragraph (a) or (b) of this Section 7, the indemnifying parties shall indemnify
each indemnified party to the full extent provided in such paragraphs without
regard to the relative fault of said indemnifying party or indemnified party or
any other equitable consideration provided for in this Section 7(d).
SECTION 8. RULE 144. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange
Act, and the rules and regulations adopted by the Commission thereunder (or, if
the Company is not required to file such reports, it will, upon the request of
any Holder, make publicly available other information so long as necessary to
permit sales of the Registrable Securities under Rule 144 under the Securities
Act), and it will take such further action as any Holder may request, all to the
extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any successor rule or similar
provision or regulation hereafter adopted by the Commission. Upon the request of
any Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements.
SECTION 9. RULE 144A. The Company covenants that it will file all
reports required to be filed by it under the Securities Act and the Exchange
Act, and the rules and regulations adopted by the Commission thereunder (or if
the Company is not required to file such reports, it will, upon the request of
any Holder, make available other information so long as necessary to permit
sales of the Registrable Securities pursuant to Rule 144A under the Securities
Act), and it will take such further action as any Holder may request, all to the
extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144A, as such rule may be amended from
time to time, or (b) any successor rule or similar provision or regulation
hereafter adopted by the Commission.
SECTION 10. MISCELLANEOUS.
(a) No Inconsistent Agreements. The Company has not entered
into nor will the Company on or after the date of this Agreement enter into any
agreement which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's other issued and outstanding securities under any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has
21
obtained the written consent of Holders of at least a majority in interest of
the outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or consent; provided, however, that, no amendment,
modification, supplement, waiver or consent to any departure from the provisions
of Section 5 hereof (other than any immaterial amendment, modification,
supplement, waiver or consent) shall be effective as against any Holder of
Registrable Securities unless consented to in writing by such Holder.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by telecopier, registered or certified
mail (return receipt requested), postage prepaid or courier to the parties at
their respective addresses set forth on the signature pages hereof (or at such
other address for any party as shall be specified by like notice, provided that
notices of a change of address shall be effective only upon receipt thereof).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; by confirmed
receipt of transmission, if telecopied; and on the next Business Day if timely
delivered to a courier guaranteeing overnight delivery.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders. If any transferee of any Holder shall
acquire Registrable Securities in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the terms
of this Agreement, and by taking and holding such Registrable Securities such
person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement and such person shall be
entitled to receive the benefits hereof.
(e) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles or rules of conflicts of law.
(h) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
22
impaired thereby, it being intended that all of the rights and privileges of the
Holders shall be enforceable to the fullest extent permitted by law.
(i) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and is intended to be the
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(j) Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement or where any provision hereof is validly
asserted as a defense, the successful party shall, to the extent permitted by
applicable law, be entitled to recover reasonable attorneys' fees in addition to
any other available remedy.
(k) Further Assurances. Each party shall cooperate and take
such action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
(l) Remedies. In the event of a breach or a threatened breach
by any party to this Agreement of its obligations under this Agreement, any
party injured or to be injured by such breach will be entitled to specific
performance of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in this Agreement and
granted by law. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that remedies at law
for violations hereof, including monetary damages, are inadequate and that the
right to object in any action for specific performance or injunctive relief
hereunder on the basis that a remedy at law would be adequate is waived.
(m) Third Party Beneficiaries. The beneficial owners of the
Registrable Securities, together with their nominees, successors and assigns,
are third party beneficiaries to this Agreement, and shall be entitled to the
rights, and subject to the obligations, of Holders contained herein as if each
were an original signatory to this Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
INTER*ACT ELECTRONIC MARKETING, INC.
By: /s/ Xxxxxx XxXxxxxxxx
____________________________
Xxxxxx XxXxxxxxxx
Executive Vice President
Notice Information:
Inter*Act Electronic Marketing, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attn: President & Chief Operating Officer
Telecopier:
[HOLDERS]
By: _____________________________
Name:
Title:
Notice Information:
At the address of the Holder set forth on the books and records of the
Company or at such other place designated by the Holder in writing in
accordance with the provisions contained herein.
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